Oil Prices Slip on Larger than Expected Inventory Build
Oil prices are slightly lower on Wednesday following the API inventory report that showed a larger than expected build in stockpiles. The Department of Energy has delayed its release of the official inventory report until Thursday in observance of a day of morning for former President George HW Bush. In the UK PMI prints were softer than expected this week, while UK Prime Minister May lost key votes in the Parliament with regard to the Brexit debate.
May is Skating on This Ice
UK Prime Minister May lost three key votes in Parliament as the Brexit debate begins. The first two votes force May to publish secret government legal documents, while the third gave Parliament the power to amend the final Brexit deal. The EU will not tolerate an amended deal which would leave the UK without a Brexit agreement and would be base for UK financial assets.
UK PMI prints this week were softer than expected. The UK Services PMI came in at 50.4 versus 52.5 expected, while the composite PMI was 50.7 versus 52.1 expected. Expectations are if there is a hard
Brexit with no deal with the EU these numbers will quickly shift below the 50-expansion contraction level. While the BOE’s no-deal scenario may sound too apocalyptic to some, we have little doubt that the economy will suffer greatly.
The API Reported a Larger than Expected Build in Stockpiles
The American Petroleum Institute revealed that crude oil inventories increased by a larger than expected 5.4 million barrels for the week ending November 30, compared to expectations of a draw in crude oil inventories of 2.3 million barrels. Inventories in the Cushing, Oklahoma facility where WTI crude oil is priced climbed by 1.4 million barrels. Additionally, the API reported a build in gasoline inventories for the week ending November 30 in the amount of 3.60 million barrels. Analysts had predicted a build of 1.3 million barrels for the week. Distillate inventories were up this week by 4.30 million barrels, compared to an expected build of 1.60 million barrels.
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